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Trefis Analysis

COMPANY OF THE DAY : 21ST CENTURY FOX

21st Century Fox recently reported earnings that were in line with expectations despite a weak performance by the studio business. The company saw steady top line growth at its cable networks and broadcasting business.

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FORECAST OF THE DAY : DIRECTV'S PAY TV MARKET SHARE

DirecTV has been able to buck industry trends by growing its subscriber base in recent years. We expect modest improvements in DirecTV's market share driven by bundling with AT&T and the NFL Sunday Ticket.

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RECENT ACTIVITY ON TREFIS

CHA Logo
What Are China Telecom's Business Units Worth Individually?
  • By , 2/11/16
  • tags: CHA CHU CHL
  • Have more questions about China Telecom? See the links below. Where Will China Telecom’s Five Year Revenue Growth Come From?  
    GM Logo
    How Different China Auto Sales Growth Rate Projections Impact GM?
  • By , 2/11/16
  • tags: GM F VLKAY
  • China is the world’s biggest car market. GM’s market share in China is growing. There is much uncertainty surrounding the rate at which new vehicle sales in China will grow over the next five years. The table below compares how different assumptions of growth rate projection will impact GM’s bottom line. Have more questions about General Motors? Click on the links below: How Do Automotive Luxury Brands Compare In Their Performance In China? How Does GM’s performance vary across geographies? How Do Auto Luxury Brands Compare In The US? How Does Ford’s Performance Vary Across Geographies? Why Is China Important For General Motors? Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for General Motors See More at Trefis  |  View Interactive Institutional Research  (Powered by Trefis) Get Trefis Technology
    CVS Logo
    CVS Earnings: Strong Performance Driven by Acquisitions and Growth In Specialty Business
  • By , 2/11/16
  • tags: CVS WAG RAD
  • Leading U.S. pharmacy services provider in the, CVS Health (NYSE:CVS) reported its Q4 2015 earnings on February 9th. The company closed its fiscal 2015 on a strong note, driven by its acquisition of the pharmacy businesses within Target and Omnicare. Target’s pharmacy, spread throughout its retail chain, is a sizable addition to CVS’ core business.  On the other hand, Omnicare is the leading pharmacy benefits manager serving the long-term care (LTC) facility sector and augments its services business.  For full year 2015, CVS revenue and diluted earnings per share increased by 10% and 17%, respectively, to $153 billion and $4.63. Backed by the recent acquisitions, the company is confident of accelerating its growth momentum in fiscal 2016 (guidance provided below) Quick Snapshot of Q4 2015 Earnings At $41.1 billion, CVS’ Q4 2015 net revenues increased 11% year on year. Revenues in the Pharmacy Services segment increased 11.1% year on year to $26.5 billion, primarily driven by the growth in the specialty pharmacy (which includes the impact of Omnicare) and pharmacy network claims. CVS’s Retail segment also showed continued growth with revenues increasing 12.5% year on year, to $19.9 billion. Close to half the increase in the Retail segment was driven by the addition of Long-term care (LTC) operations acquired as part of the Omnicare acquisition. CVS’s adjusted earnings per share (EPS) for the quarter of $1.53 saw a 26.5% increase compared to Q4 2014. In Q4 2015, the company opened 53 new stores and for the full year opened 130 new net stores in addition to the acquired pharmacies. ( Read Press Release ) View our detailed analysis for CVS Health Acquisitions To Drive Growth In 2016 In August 2015 CVS acquired Pharmacy services provider Omnicare for about $10 billion, followed by the acquisition of Target’s pharmacies for $1.9 billion in December 2015. Omnicare helps strengthen CVS’s position in the Retail/LTC segment as well as the specialty pharmacy market. The acquisition of Omnicare boosted the revenue growth of the company in the latter half of fiscal 2015 and equipped CVS with a new pharmacy dispensing channel, enhancing its ability to provide the continuity of care for patients as they transition through the healthcare system. Additionally, Omnicare’s complementary specialty pharmacy platform and clinical expertise augmented CVS’ capabilities in the specialty segment, which is already an important growth driver for CVS. (More details provided below) The acquisition of Target’s more than 1,600 pharmacy departments and 80 medical clinics makes CVS’ network of pharmacies the largest among its competitors. Prior to the acquisition CVS had close to 7,900 pharmacy stores. Not only does the acquisition increase CVS’ share of the total prescriptions filled in the U.S., by enabling the company to expand its retail presence in new markets, but it should yield additional benefits in the form of lower drug acquisition costs, leading to better EBITDA margins. CVS boosted its market share in the retail pharmacy market to 21.6% from 21.0% in 2014. Both acquisitions were carried out successfully and the integration is well underway. With Omnicare integration almost complete, Target’s pharmacies are being rebranded under CVS and the process is expected to complete by fiscal 2016. Specialty Pharmacy Services Continues To Be A Strong Growth Driver CVS’s specialty segment continued to grow faster than the market, with revenues in the Pharmacy services segment increasing by 11.1% in Q4 2015. The growth in specialty was driven by increased claims due to new products, new clients, and the gain of 11% in Specialty Connect. Partially offsetting this growth was an increase in the generic dispensing rate, which grew approximately 165 basis points year on year. CVS’ specialty pharmacy services continued to gain share in Q4 2015. Specialty drugs treat complex diseases such as multiple sclerosis, rheumatoid arthritis, hepatitis C and cancer, among others. Because of the specialized way in which these drugs need to be administered, specialty pharmacies play an important role in providing the support required to effectively deliver these drugs to patients. CVS’ Specialty Connect offering, which was rolled out by May 2014, fills this need for greater convenience and access to specialty medications. The Specialty market in the U.S. currently amounts to $87 billion and is expected to grow 9.1% by 2020. Q1′ 16 Guidance – GAAP and adjusted EPS in the range of $1.03 to $1.06 and $1.14 to $1.17, respectively. Fiscal 2016 Outlook – Net revenue growth of 17% to 18.5%. – Full year free cash flow to be in the range of $5.3 to $5.6 billion. – Adjusted EPS of $5.73 to $5.88, excluding acquisition-related transaction and financing costs. – GAAP diluted EPS in the range of $5.28 to $5.43. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research Other Sources:  Seeking Alpha Earnings Transcript
    F Logo
    How Does Ford's Performance Vary Across Geographies?
  • By , 2/11/16
  • tags: F GM TM
  • Financial performance for auto makers varies widely across geographies. The table below compares four important metrics for Ford across different geographies over the last two fiscal years. Have more questions about auto companies? Click on the links below: How Do Automotive Luxury Brands Compare In Their Performance In China? How Does GM’s performance vary across geographies? How Do Auto Luxury Brands Compare In The US? Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for Ford Motor See More at Trefis  |  View Interactive Institutional Research  (Powered by Trefis) Get Trefis Technology
    BBRY Logo
    What's The Upside For BlackBerry If It Doubles Its Handset Market Share?
  • By , 2/11/16
  • tags: BBRY AAPL SSNLF
  • There could be 70% upside to BlackBerry’s EBITDA (earnings before interest, taxes, depreciation and amortization) if it doubles its handset market share to about 0.5% this calendar year, driven by its new high-end Android devices. This could result in a similar upside to its value, using EBITDA multiple valuation. Have more questions about BlackBerry? See the links below. What Caused BlackBerry’s Fortunes To Plummet In The Last 5 Years? How Has BlackBerry’s Revenue Composition Changed In The Last 5 Years? Handsets, Software, Services: What’s BlackBerry’s Revenue & Gross Profits Breakdown? 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.comNotes: See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
    GM Logo
    Why Is China Important For General Motors?
  • By , 2/11/16
  • tags: GM VLKAY F TM HMC
  • China is the biggest car market in the world. GM is gaining market share in China. GM operates in China through Joint Ventures. Its China results are reported in terms of Equity Income. That figure contributes significantly to its bottom line each year. Have more questions about auto companies? Click on the links below: How Do Automotive Luxury Brands Compare In Their Performance In China? How Does GM’s performance vary across geographies? How Do Auto Luxury Brands Compare In The US? How Does Ford’s Performance Vary Across Geographies? Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for General Motors See More at Trefis  |  View Interactive Institutional Research  (Powered by Trefis) Get Trefis Technology
    GM Logo
    How Does GM's Performance Differ Across Geographies?
  • By , 2/11/16
  • tags: GM
  • Financial performance for auto makers varies widely across geographies. The table below compares four important metrics for GM across different geographies over the last three fiscal years. Have more questions about General Motors? Click on the links below: How Do Automotive Luxury Brands Compare In Their Performance In China? Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for General Motors See More at Trefis  |  View Interactive Institutional Research  (Powered by Trefis) Get Trefis Technology
    TSLA Logo
    Earnings Review: Tesla Reports Positive Cash Flow In Core Operations But Ancillary Expenditures Continue To Mount
  • By , 2/11/16
  • tags: TSLA GM VLKAY DDAIF
  • Tesla Motors (NYSE:TSLA) announced its fourth quarter and full year results for the fiscal year 2015. The Silicon Valley based auto maker announced record deliveries for the year of its premium sedan, Model S. New vehicle sales increased by 76% year over year resulting in a $179 million positive cash flow from core operations for the full year. However, on an aggregated basis, the company is still in a loss position, due to ongoing expenditures related to the production of Tesla’s new premium SUV (Model X), the construction of the Giga Factory, the production of the company’s energy storage product (Tesla Powerwall), and other expenditures related to product testing, research and development and testing. Still, there were several pointers towards the success of the Model S, which now holds a 25% market share in the premium sedan market in the U.S.  There are early signs, moreover, of strong demand for the Model X. The company is also set to unveil a prototype of the Model 3, its mass market electric car, on March 31. Additionally, management posted encouraging guidance for a number of year-ahead metrics, including: 1) an improved gross margin for the Model S; 2)  non-GAAP profitability for the full year and GAAP profitibiity for the fourth quarter;  3) a 60%-80% increase in new vehicle sales for 2016; and, 4) a March 31st unvieling of the Model 30 (as noted) with production and deliveries to follow in late. Below, we take a look this quarter’s results and the outlook for the company going forward. We have a  price estimate of $170 for Tesla, which is about 20% above the current market price. Cash Flow Positive In Core Operations Tesla’s core operations related to the Model S can be defined as the production and distribution of the vehicle, and sales of the premium sedan to its leasing partners. This excludes costs incurred in the build out of service centers, production facilities, stores and charging stations. Excluding all these costs, Tesla generated $179 million in cash flow this quarter, compared to losses of $40 million and $41 million in the previous two quarters. As highlighted above, in order to support the volume of its vehicles, Tesla has to build out an entire infrastructure. The company does not sell its vehicles through dealerships. Instead, it sells through its own stores and offers after-sales servicing through its own service centers. Additionally, the company has to make charging stations where Tesla vehicle owners can charge their vehicle batteries. Ongoing investments in this infrastructure means that Tesla burns cash a lot faster compared to a traditional auto maker. However, these investments are necessary for its business and can result in significant advantages in the long run. Strong Demand For Vehicles In Q4, Tesla’s global vehicle deliveries improved 76% compared to the final quarter of the previous fiscal year. The premium sedan Model S has been gaining market share in the four-door premium sedan segment in the U.S. In fact, it was the only vehicle which posted a year-on-year sales gain in this segment. Competitors such as Audi A7 and A8, BMW 6-Series and 7-Series, Mercedes CLS-class and S-class, Lexus LS and Jaguar XJ all posted sales declines, with  overall segment sales declining by 0.8%. Tesla Model S, which now has over 25% market share in this segment, grew its sales by over 50% in the full year. This is remarkable in a year in which gas prices were so low because it means that people value Tesla’s vehicles for their superior performance and capabilities as opposed to their ability to save on fuel and maintenance costs. The total number of vehicle deliveries is still low because Tesla does not have stores in many locations, partly due to political opposition to the idea of cutting out dealers. Moreover, the company is still only expanding in several geographies such as China, Mexico and Western Europe. Meanwhile, the company is still only ramping up its production of the Model X. According to management, reservations of the SUV grew by 75% compared to the prior year. They have previously indicated that it will take until the second half of 2016 to fulfill the orders already in place for the vehicle. Additionally, the company guided that production rate for the Model X can be expected to reach 1,000 units a week in the second quarter of fiscal 2016. Margins In Q4, automotive gross margin was 19.2% on a GAAP basis and 20.9% on a non-GAAP basis, excluding revenue generated from ZEV credits ($8 million). These margins were affected by one time costs associated with the development of the Model X and non-recurring impairment charges related to the elimination of obsolete parts and painting equipment used in Model S production. Excluding these costs, gross margin on a GAAP basis was 23.7% for the quarter and non-GAAP margin was 25%. In 2016, the company expects Model S margin to improve to 30% and the Model X margin to come in at around 25%. Additionally, operating expenses are expected to increase by 20% and the company guided for capital expenditures of $1.5 billion for the full year. Tesla plans to use this money to start cell production at the Giga Factory, open about 80 retail locations and service centers and 300 new Supercharger locations. See full analysis for Tesla Motors Understand How a Company’s Products Impact its Stock Price at Trefis View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
    TM Logo
    Toyota Motors Acquires Daihatsu : Betting On The Small Cars Market ?
  • By , 2/11/16
  • tags: TM VW F
  • Toyota Motors  (NYSE:TM)   announced that Daihatsu will now become its fully owned subsidiary by way of a share-exchange which is expected to be completed by August 2016.. According to the company, the purpose of this agreement is to develop better cars by adopting a unified strategy for the small car segment, where both companies can focus on their key competencies.  While Toyota already owns a 51% stake in Daihatsu, a complete acquisition gives it an advantage in the small car segment in Japan and other Asian countries. We believe this move should strengthen Toyota’s already strong position in Asia and give it an edge to capture a market share in the small cars segment in emerging economies such as India and China. See our complete analysis for Toyota Motors here Growth In Emerging Economies Could Drive Sales Of Small Cars Automakers are betting heavily on demand for small cars in emerging economies. In 2015, General Motors announced its plans to invest over $ 5 billion in the next several years to develop a new range of small cars based on a common architecture which will be sold as Chevrolets in China, India, Brazil, Mexico and other emerging markets.. While vehicle sales grew by 2.5% in Asia-Pacific in 2015, the sales growth in China was 4.7%, primarily due to tax incentives for small car buyers introduced in the middle of the year while new vehicle sales in India grew by close to 8%..  At present, South East Asian countries such as Indonesia and Thailand are struggling with economic growth due to low commodity prices, which is causing a decline in automotive sales. That said,  small cars should drive sales in emerging economies over the next several years.  Falling oil prices and a rapid pace of economic growth in regions such as India and China have created a large number of first time car buyers, who would prefer smaller cars to luxury cars. Given that emerging economies have a very low number of cars per 1,000 people (18 cars per 1000 people in India in 2011), there is a huge market for first time car buyers.  According to a study by JD Power, 45% of new buyers in India considered a small car in 2015. Although this figure is lower than the 65% number in 2012 it still represents a significant portion of first time car buyers. The study also claimed that 10% of all shoppers considered a newly launched model in 2015, indicating that a new line of models would attract interest among buyers.. Although Indonesia and Japan are seeing a decline in car sales, Ford’s exit from these regions can create an opportunity for Toyota Motors to increase share. We believe Toyota’s acquisition of Daihatsu will strengthen its position in emerging Asian countries over the long term. As the company rolls out a line of small cars, it can tap into the opportunity in India, China and South East Asian countries The full acquisition of Daihatsu furthers the strategic direction towards these goals. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
    TM Logo
    How Do Auto Luxury Brands Compare In The US?
  • By , 2/11/16
  • tags: TM
  • Luxury Car Sales In The U.S. Are Important Because : Luxury Cars Make Up Half of the Industry’s Profit Share BMW and Mercedes Lead The Way In The U.S. But Lexus and Audi Are Growing Fast Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for Toyota Motor See More at Trefis  |  View Interactive Institutional Research  (Powered by Trefis) Get Trefis Technology
    SSNLF Logo
    What's The Impact On Samsung If It Loses Apple's SoC Business For The iPhone 7?
  • By , 2/11/16
  • tags: SSNLF INTC
  • There have been reports that Samsung’s key rival TSMC has won exclusive rights to manufacture the A10 SoC on the iPhone 7, which is expected to launch later this year. This could prove to be a major setback for Samsung’s foundry operations, since the company currently holds a chunk of Apple’s orders for the A9 chip on the iPhone 6S series. Below, we try to get a sense of what Samsung could stand to lose by not being on Apple’s next flagship by looking at its exposure to the current flagship iPhone 6S.   Have more questions about Samsung Electronics? See the links below. Telecom, Semiconductors, Displays: What’s Samsung’s Revenue & EBITDA Mix? How Has Samsung’s Revenue Mix Changed Over The Last 5 Years? What Drove Samsung’s Growth In The Last 5 Years? Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for Samsung References: Upgraded Components in iPhone 6S Plus Costs Apple an Extra $16 Per Device , IHS See More at Trefis   |   View Interactive Institutional Research   (Powered by Trefis) Get Trefis Technology
    NSC Logo
    How Has Norfolk Southern's Revenue Composition Changed Over The Last 5 Years?
  • By , 2/11/16
  • tags: NSC UNP CSX
  • Have more questions about Norfolk Southern? See the links below. What Is Norfolk Southern’s Revenue And EBITDA Breakdown? What Is Norfolk Southern’s Fundamental Value Based On 2015 Results? By What Percentage Did Norfolk Southern’s Revenue & EBITDA Grow In The Last 5 Years? By What Percentage Can Norfolk Southern’s Revenue & EBITDA Grow In The Next 3 Years? Notes:   See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
    SLW Logo
    How Do Silver Wheaton's Margins Compare With Those Of Traditional Precious Metal Mining Companies?
  • By , 2/11/16
  • tags: SLW ABX NEM FCX
  • Silver Wheaton, the pioneer of the precious metal streaming business, enjoys higher margins as compared to traditional precious metal mining companies, as illustrated by the table shown below. Have more questions about Silver Wheaton? See the links below. What Is Silver Wheaton’s Revenue And EBITDA Breakdown? What Is Silver Wheaton’s Fundamental Value Based On Expected 2015 Results? How Has Silver Wheaton’s Revenue Composition Changed Over The Last 4 Years? By What Percentage Did Silver Wheaton’s Revenue & EBITDA Decline In The Last 4 Years? By What Percentage Can Silver Wheaton’s Revenue & EBITDA Grow In The Next 3 Years? By What Percentage Will Silver Wheaton’s Silver Equivalent Production Increase If Production Commences At The Pascua-Lama Mine? How Will Silver Wheaton’s Revenue Composition Change Over The Next 5 Years? Notes:   See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
    LUV Logo
    What Factors Caused A Sharp Jump In Southwest's 2015 Operating Margin?
  • By , 2/11/16
  • tags: LUV DAL UAL AAL ALK JBLU
  • A sharp decline in Southwest’s fuel costs resulted in a meaningful rise in its operating margins in 2015. Have more questions about  Southwest Airlines (NYSE:LUV)? See the links below: How Has Southwest’s Revenue And EBITDA Composition Changed Over The Last Five Years? Southwest Airlines: The Year 2015 In Review What Is Southwest’s Outlook For 2016? What Is Southwest’s Fundamental Value Based On 2016 Estimated Numbers? What Is Southwest’s Revenue And EBITDA Composition? How Has Southwest’s Revenue And EBITDA Grown Over The Last Five Years? Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for Southwest Airlines View Interactive Institutional Research (Powered by Trefis): Global Large Cap  |  U.S. Mid & Small Cap  |  European Large & Mid Cap More Trefis Research
    EXPE Logo
    Key Takeaways From Expedia's Robust Q4 2015 Earnings Result
  • By , 2/11/16
  • tags: EXPE PCLN TRIP
  • Expedia  (NASDAQ:EXPE) released its Q4 2015 earnings on February 10th. Riding on both core organic growth and its host of acquisitions, the company, as predicted, delivered yet another quarter of robust performance. In Q4 2015 (excluding eLong), Expedia’s gross bookings grew by 40% year-over-year to around $15 billion and its revenues were higher by 29% to $1.7 billion. Out of this, the acquisitions added around 28 percentage points and 19 points to gross bookings growth and revenue growth, respectively. For the full year 2015, Expedia has completed around $6 billion worth of acquisitions. The main points in the earnings call was Expedia’s recent HomeAway acquisition and how it has made the OTA the largest accommodation provider in the world with 1,508,000 listings across its platforms. Expedia’s eLong divestiture and the acquisition of Travelocity, Orbitz, Decolar, and finally, HomeAway, are all strategic decisions that are working really well for the company. However, the company might be more interested in international takeovers in 2016 and beyond. Finally, Expedia is gradually changing the economics of hotel listing on its websites by offering hotels a bidding option to choose for top slots on its pages. Though in the initial stages, this move might change the way OTAs do business with hotels in the long run. For the full year 2015 (excluding eLong), Expedia’s gross bookings grew by 24% to around $60 billion and its revenues grew by 19% to reach ~$6.6 billion. Expedia had guided to around 35% to 40% EBITDA growth for the full year 2016. We are in the process of updating our   price estimate of $125 for Expedia’s stock .   See Our Complete Analysis for Expedia Here HomeAway Acquisition Was The Main Focus Of The Earnings Call Expedia’s December 2015 acquisition, HomeAway–the world’s largest vacation rental marketplace–seemed to be the hot topic of discussion in the Q4 2015 earnings conference call. The management stated that the vacation rental website had performed above expectations in Q4 2015. Now, the next plans for HomeAway seems to be an end to end platform enabling vacation rental and home sharing transactions. Expedia is chalking out ambitious expansion plans for HomeAway. Also, HomeAway’s business model is currently being transitioned from a traditional listing model to a full-fledged online transactional model. The management expects around $350 million in adjusted EBITDA from HomeAway in 2018. In June 2015, Kayak, Priceline ’s travel search engine, entered into an agreement with HomeAway. The agreement allows Kayak to list HomeAway’s vacation rental properties on its website. Even though Expedia  forged a partnership with HomeAway since late 2013, erstwhile, the company didn’t give any special importance to HomeAway’s vacation rental listings which were listed on the common Expedia.com web page along with its other listings. The HomeAway acquisition currently gives Expedia the largest portfolio of accommodations on its platform. Recently, not only the regular OTAs, but metasearch engines such as Google and TripAdvisor, are also expanding their functionalities to offer services similar to OTAs. TripAdvisor’s Instant Booking has been a rising star in the OTA horizon, recently. Also, Airbnb is emerging as a significant threat. In a November 2015 interview with Skift, Expedia’s CEO Dara Khosrowshahi mentioned how Airbnb will directly challenge the market leaders in online hotel bookings in the future. Hence, Expedia’s strengthening of its accommodation platform and its metasearch functionalities through Trivago are steps to maintain its invincibility in the online travel space. It is noteworthy to mention that Trivago is currently delivering huge growth for Expedia. For 2015, Trivago’s standalone revenue stood at around €490 million, depicting around 60% year-over-year growth and its adjusted EBITDA reached a few million euros. HomeAway is expected to become another significant growth driver for the company in the future. (Source: Expedia Investor Presentation ) Expedia Might Change The Future Of Hotel Bookings Expedia is about to cause a huge stir in the future of hotel booking by introducing its “Accelerator” program. Expedia’s market managers have recently started allowing hotels to bid against one another in order to achieve the top spots in Expedia’s hotel listing on brands such as Expedia.com and Hotels.com. On February 10th, Expedia’s CFO Mark Okerstrom had spoken about the program at length, in an interview with Skift. The program will transform the pages of search results into a marketplace where hotels, vying for the top listings, will compete against one another. Hotels are ready to pay for the top slots because the placement on the search result increases the chances for the hotels of being booked by travelers. The details of the Accelerator program was finalized in Q4 2015. Though it is still in the early stages and has been introduced to only a few markets so far, Expedia’s CEO Dara Khosrowshahi mentioned in the fourth quarter earnings call that the participating hotels have given a good response. This bidding model introduced by Expedia can set the norms for the online travel industry at large in the future. What Will Expedia Acquire Next? After a year studded with acquisitions in 2015, we are curious to know about the company’s plans in 2016. (Source: Expedia Investor Presentation ) The Travelocity and Orbitz acquisition consolidated the U.S. online travel industry for Expedia. Now with HomeAway, Expedia expanded its portfolio even further to vacation rentals. Hence, we can expect the company to look outside the U.S. now, and international acquisitions might be in the cards. Also, the company might look into corporate travel for takeover opportunities as right now, its competitive advantage lies in leisure travel. Finally, Expedia might be on the lookout for innovative companies such as Alice or Trivago, as its next acquisition target.
    DAL Logo
    Why Did Delta's Operating Margin Soar In 2015?
  • By , 2/11/16
  • tags: DAL UAL AAL ALK LUV JBLU
  • A steep rise in Delta’s operating margin was driven by a huge drop in fuel costs in 2015. Have more questions about  Delta Air Lines  (NYSE:DAL)? See the links below: Delta Air Lines: The Year 2015 In Review How Will Delta’s Revenue And EBITDA Grow Between 2015 and 2018? How Has Delta’s Revenue And EBITDA Changed Over The Last Five Years? What Is Delta’s Revenue And EBITDA Brekdown? What Is Delta’s Fundamental Value Based On Estimated 2016 Numbers? How Has Delta’s Revenue And EBITDA Composition Changed Over The Last Five Years? Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for Delta Air Lines Limited View Interactive Institutional Research (Powered by Trefis): Global Large Cap  |  U.S. Mid & Small Cap  |  European Large & Mid Cap More Trefis Research
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    Twitter Earnings Takeaways: User Base Weakness, But Better Ad Engagement Drives Earnings Beat
  • By , 2/11/16
  • tags: TWTR FB LNKD
  • Twitter  (NYSE:TWTR) again disappointed investors with quarterly results that failed to meet expectations on user growth as well as future guidance. The company’s average monthly active users (MAUs) grew 9% year-over-year (y-o-y) to 320 million in Q4 2015 but were flat compared to the prior quarter. In fact, if we exclude users who receive tweets via text messages (SMS Fast Followers), Twitter’s average MAUs actually declined from 307 million in Q3 2015 to 305 million in the fourth quarter. To ward off investor fears of a declining user base, management stated that MAUs had reached Q3 2015 levels by the end of January 2016, showing positive active user growth. Twitter’s struggle to grow its active user base was the primary investor concern through 2015, and that is unlikely to change this year. On a positive note, Twitter reported a 48% y-o-y increase in revenue in Q4 2015 to $710 million, which was roughly in line with market expectations. In terms of the bottom line, the company reported adjusted earnings of 16 cents per share in the fourth quarter, easily beating analyst consensus estimates of 12 cents a share. For the first quarter ending March 2016, the company expects revenue to be in the range of $595 to $610 million, missing the consensus estimate of $629 million. We are in the process of updating our $34 price for Twitter’s stock .
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    Disney's Record Fiscal Q1 Earnings Reaffirm Optimistic Outlook
  • By , 2/11/16
  • tags: DIS FOX CBS TWX VIA
  • Disney  (NYSE:DIS) fiscal Q1 results were above the street estimates led by Star Wars . However, the stock price still dropped 4% in the trading session as investors continue to worry about ESPN subscriber growth. However, the company’s management stated that ESPN recently added more subscribers without quantifying the numbers. The subscriber decline reported last year was primarily due to people opting for lighter pay-TV packages, which did not include ESPN. Now the company is negotiating with pay-TV operators to include ESPN in smaller packages, including the recent successful example of Dish Network. We continue to believe that ESPN will not see significant subscriber declines in the coming years, as it has secured long term rights to some of the most popular sports programming, including NFL and MLB (see – How Important Is ESPN For Disney? ). For the quarter, media networks revenue grew 8%, led by double-digit advertising growth while segment operating income declined 6% due to higher programming costs. Theme parks posted steady volume and spending growth in the U.S., and the segment’s operating income jumped 22% to just under $1 billion. Theme parks operations looks promising for Disney in the coming years, as the company will add new attractions, including Avatar Land and Star Wars. Also, Disney’s Shanghai park will be operational from June this year and should provide a significant boost to international theme parks and resorts revenues. It should be noted that China’s theme park market has grown in low-double-digits in the past five years, and Disney will surely benefit from the increasing demand in the region (also see – How Important Are Theme Parks For Disney? ). Looking at the studio business, Star Wars was the driving force for the segment and Disney’s overall results. Revenues jumped 46%, while operating income was up a stellar 86% to over $1 billion. In fact, beyond studio operations, Star Wars also boosted the consumer products and interactive media business, which saw a 23% jump in segment operating income to $860 million. We continue to believe that Star Wars will remain the future growth driver for Disney, as there are more sequels to follow in the coming years. Disney is likely to continue to monetize its acquired brands, such as Marvel and Pixar, along with Lucasfilm, in the coming years. There is a long list of popular movie titles, such as Pirates of the Caribbean, Captain America, Thor, Guardians of the Galaxy  and Frozen  among others, that Disney plans to release in the coming years. Previous installments of these movies have done well at the box-office and there are no signs of demand fading away. This strengthens our view that the studio business will continue to provide steady growth for Disney in the foreseeable future. We currently have $121 price estimate for Disney’s shares . Understand How a Company’s Products Impact its Stock Price at Trefis View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
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    What Would Be The Impact Of A 100 Basis Points Increase In Silver Wheaton's Share Of Silver By-Product Production From Gold & Base Metal Mines?
  • By , 2/11/16
  • tags: SLW ABX NEM FCX
  • Silver Wheaton’s silver production in 2019 could rise by 20% if its market share in the production of silver by-products from gold and base-metal mines (which constitute the target market for Silver Wheaton’s silver streaming deals) rises by 100 basis points.   *Estimates made for the year 2019 since production visibility is the best for this time horizon. **Source: Silver Wheaton’s January 2016 Corporate Presentation Have more questions about Silver Wheaton? See the links below. What Is Silver Wheaton’s Revenue And EBITDA Breakdown? What Is Silver Wheaton’s Fundamental Value Based On Expected 2015 Results? How Has Silver Wheaton’s Revenue Composition Changed Over The Last 4 Years? By What Percentage Did Silver Wheaton’s Revenue & EBITDA Decline In The Last 4 Years? By What Percentage Can Silver Wheaton’s Revenue & EBITDA Grow In The Next 3 Years? By What Percentage Will Silver Wheaton’s Silver Equivalent Production Increase If Production Commences At The Pascua-Lama Mine? How Will Silver Wheaton’s Revenue Composition Change Over The Next 5 Years? How Do Silver Wheaton’s Margins Compare With Those Of Traditional Precious Metal Mining Companies? Notes:   See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    What Is Norfolk Southern's Fundamental Value Based On 2015 Results?
  • By , 2/11/16
  • tags: NSC CSX UNP
  • Have more questions about Norfolk Southern? See the links below. What Is Norfolk Southern’s Revenue And EBITDA Breakdown? How Has Norfolk Southern’s Revenue Composition Changed Over The Last 5 Years? By What Percentage Did Norfolk Southern’s Revenue & EBITDA Grow In The Last 5 Years? By What Percentage Can Norfolk Southern’s Revenue & EBITDA Grow In The Next 3 Years?   See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    Coca-Cola Ends Its Transitional Year With Solid Organic Growth; Structural Changes To Alter Business Going Forward
  • By , 2/11/16
  • tags: KO PEP DPS BUD
  • The Coca-Cola Company (NYSE:KO) has ended its transitional year with solid volume growth across both sparkling and non-sparkling beverages. In the Q4 and full year results, announced on February 9, the company reported 4% year-over-year organic sales growth. Although the net sales declined 4% to $44.3 billion, due to a 7 percentage point negative impact of unfavorable currency translations, global volume growth of 2%, including a 1% rise in sparkling volume, reflects strong core performance. We estimate a $42 stock price for Coca-Cola, which is slightly below the current market price. See our full analysis for  Coca-Cola   2015 had been a transitional year for one of the world’s largest fast-moving consumer goods company, which is looking to restructure, consolidate some of its operations, and spin-off some others — all in a bid to drive operational efficiencies, reduce supply-chain costs, and improve profitability. Coca-Cola is moving away from a capital-intensive organization with its intended refranchising plans for North America, and now, China, and structural changes in Europe and Africa. Coca-Cola is looking to refranchise two-thirds of its bottling territories in North America by the end of 2017, and a substantial portion of the remaining territories no later than 2020, in a bid to move away from the capital intensive and low-margin business of distribution. All this in hopes to improve operating performance. So far, the company has transferred or signed agreements for territories covering over 40% of U.S. bottle can volume, and announced the creation of the National Product Supply System, to strengthen and streamline U.S. production. In addition, Coca-Cola aims to close the combination of Coca-Cola Enterprises, Coca-Cola Iberian Partners, and the company’s subsidiary Coca-Cola Erfrischungsgetränke AG into one bottling company called Coca-Cola European Partners, and the combination of SABMiller, Coca-Cola, and Gutsche Family Investments (GFI) bottling operations in Southern and East Africa into Coca-Cola Beverages Africa, by the second quarter. What the consolidated bottling operations will do is trim the extra overhead costs, improve supply-chain efficiency, and leverage the best practices of each of the bottlers to improve service to customers and consumers across Western Europe and Africa — the company hopes.   Coca-Cola’s focus is on building strong, sustainable and valuable brands, driving system capabilities, and becoming less capital intensive, with higher margins and returns. The company’s refranchising plans and investments in small, yet budding brands, are testament to this strategy. There is the Monster deal and the premium milk brand Fairlife, which could add incremental sales going forward. The company signed a distribution agreement in the U.S. with Suja, a high growth organic cold-pressed juice company, last quarter, and recently announced an investment in Chi Limited, Nigeria’s leading value-added dairy and juice company. The company had also announced plans to expand into plant-based protein drinks through the acquisition of the beverage business of China Green Culiangwang Beverages Holdings in China. The news of JAB Holding buying Keurig Green Mountain, in which Coca-Cola held a 16% stake, also bailed out the beverage giant, which was nursing an unrealized loss of about $1 billion through its equity position in Keurig. Coca-Cola remains committed to add to its already strong portfolio of twenty $1 billion brands, and other fast-growing strong regional brands. What boosts the company’s strategy is the solid performance of its products, especially in North America, which formed half of the company’s top line in 2015. Coca-Cola achieved 3% growth in unit sales in the region in Q4, including a 2% growth in sparkling volume and a larger 6% growth in non-sparkling volume. North America sales growth carries significant importance for Coca-Cola not only because it’s the home market, where the company derives a substantial portion of its revenues from, but also because growth in this market is challenged by the ever-so-growing health and wellness concerns, so it becomes difficult to extract growth. Evolving customer preferences, and a shift to a healthier diet, present obstacles to growth for the company, which sells beverages that are often blamed for health problems and the widespread obesity concerns. However, Coca-Cola saw growth in its soda portfolio in the 4th quarter, which can be attributed to the positive economic environment, strong marketing and advertising, and branding.   The diets have fared even worse than regular soft drinks in the last couple of years in the U.S., as customers have grown skeptical about the safety of the artificial sweeteners used in these drinks. However, while Coca-Cola saw Diet Coke volumes decline for yet another quarter, Coke Zero grew. In fact, according to the company, in the 80% of its business which is the international business, variants of Coke, including the lights, diets and Coke Zero, outgrew Coke Classic. While Coca-Cola’s organic growth remains strong, negative currency translations have taken a toll on the company’s financials. A large 23 percentage point negative impact of weaker foreign currencies more than wiped out an 11% rise in organic revenues in Latin America. In 2016, Coca-Cola expects continued macroeconomic volatility, especially in Brazil and Russia, which will impact its financials. Organic revenue is expected to grow 4-5%, backed by the media and marketing investments made by the company to grow its brands. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
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    Cisco Jumps On Earnings Beat; Gives Indications Of A Secure Future
  • By , 2/11/16
  • tags: CSCO JNPR
  • Cisco ‘s (NASDAQ:CSCO) shares increased by more than 5% after its Q2 fiscal 2016 growth surpassed analysts’ estimates. The company then announced an increase in dividends and share buybacks, exhibiting ample confidence in its future growth potential. Cisco mentioned that even though macroeconomic headwinds are keeping carrier spending below what it wants, the company executed very well during the quarter, which helped it beat its initial guidance on revenues and EPS. Although the company doesn’t expect its growth to accelerate going forward, it is expected to be steady and much better than what the current slump in the market indicates. With increased focus on high-end switches and routers, higher investments in security, data analytics software and cloud-based tools, a string of acquisitions and the evolution of the Internet of things (IoT) domain, Cisco appears to be well-equipped to fend off negative headwinds. For the second quarter of fiscal 2016, Cisco’s sales increased 2% to $11.9 billion, just ahead of the average analyst estimate of $11.8 billion. Gross margins expanded 210 basis points year over year to 63.8% and net income jumped almost 30% to $3.1 billion or $0.62 per share. Excluding certain costs, EPS was $0.57, three cents ahead of the consensus estimate. We have a $26 price estimate for Cisco, implying a 20% premium to the current market price
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    What Is Norfolk Southern's Revenue And EBITDA Breakdown?
  • By , 2/11/16
  • tags: NSC UNP CSX
  • Have more questions about Norfolk Southern? See the links below. What Is Norfolk Southern’s Fundamental Value Based On 2015 Results? How Has Norfolk Southern’s Revenue Composition Changed Over The Last 5 Years? By What Percentage Did Norfolk Southern’s Revenue & EBITDA Grow In The Last 5 Years? By What Percentage Can Norfolk Southern’s Revenue & EBITDA Grow In The Next 3 Years? Notes:   See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
    Healthy Biotech Growth from Four Seedling Stocks: Raghuram Selvaraju of Rodman & Renshaw
  • By , 2/11/16
  • tags: SNY SGYP
  • Submitted by The Life Sciences Report as part of our contributors program Healthy Biotech Growth from Four Seedling Stocks: Raghuram Selvaraju of Rodman & Renshaw   Source: George S. Mack of The Life Sciences Report   (2/10/16) https://www.streetwisereports.com/pub/na/healthy-biotech-growth-from-four-seedling-stocks-raghuram-selvaraju-of-rodman-renshaw It takes nerves of steel to follow micro-cap stocks and ascribe future valuations in hefty multiples. Raghuram “Ram” Selvaraju of Rodman & Renshaw has made the micro- and small-cap biotech universe his specialty, and his track record is impressive. In this interview with The Life Sciences Report, Selvaraju, a former big pharma researcher, details four growth names that could follow in the hallowed footsteps of previous winners. The Life Sciences Report : You must get a real feel for market sentiment when you’re talking to institutional investors. Do you feel they have moved into more defensive positions? Are they moving out of healthcare, or up the food chain in market cap? Ram Selvaraju : We have seen a significant rotation out of healthcare and, in particular, out of speculative, development-stage biotech. We have also seen a fair bit of attrition among larger-cap names in the space, and this is not limited to the specialty pharmaceuticals companies that have been at the heart of recent pricing controversies, such as Valeant Pharmaceuticals International Inc. (VRX:NYSE; VRX:TSX) . Companies like Celgene Corp. (CELG:NASDAQ) and Gilead Sciences Inc. (GILD:NASDAQ) have gotten hit as well, primarily because investors believe if there are going to be broader debates over drug pricing, big biotechs that set high prices for their innovative products at introduction are going to get hit just as badly as guys in the spec pharma space that engage in what’s called product flipping. TLSR : Go ahead and explain product flipping. RS : Product flipping is practiced by pharma execs who buy a company with products on the market and then jack up the prices of the products acquired. The acquirers of the products don’t do anything to make the products better. They just jack up prices unilaterally because it’s what the market can bear. This is obviously egregious behavior, but the fact is that regardless of whether you’re engaged in price gouging or are actually in the business of launching a premium-priced innovator drug, investors are scared and are moving out of all of these companies. TLSR : How long could this cycle last? RS : I don’t know how long this sentiment will last. I anticipate that if and when we get some clarity on where the pricing debate is going, or if the controversy dies down, we will see investors begin to rotate back into the space. Whether this constitutes taking up a defensive position is difficult to answer because healthcare itself is widely considered to be a defensive sector. It’s noncyclical, people need drugs, and demand for healthcare products is thought to be largely price inelastic. I do know that because of these recent healthcare-specific concerns, investors have become markedly more reluctant to keep capital deployed in this space. TLSR : We have seen a rather dramatic slide in valuations, and it seems to have hurt some companies with good prospects, as well as the nascent, preclinical-stage companies. Does that sum it up? RS : Where we’ve seen the most damage by far has been in the small- and micro-cap space, where a significant percentage of stocks trade below cash or even at negligible enterprise value. This is even true in cases where companies have positive clinical data, and even if they have risk-mitigated drug development projects ongoing—and sometimes even in cases where companies are generating revenue and could potentially obtain profitability in the near term. From our perspective, there has been a flight to quality, but there has also been a rotation out of the sector at large. TLSR : What will be the upshot of this kind of selloff? When small- or micro-cap companies need money to get their drug candidates into Phase 2 or Phase 3, will they have trouble raising the capital? Will they have to give away too many warrants with shares? RS : Clearly, companies are no longer finding access to capital as easily as they could a year or two ago. People began calling the top in the biotech sector in mid-2015, and we saw investors start to exhibit reluctance to deploy capital into smaller companies along the same issuer-friendly lines as had been the case with the advent of at-the-market (ATM) issuances, registered direct secondary offerings pricing at relatively minor discounts and deals being done without warrant coverage. For the remainder of this year, especially among more vulnerable firms, you are going to see a resurfacing of structured deals—private investments in publicly listed equities (PIPEs), warrant-laden transactions, registered direct offerings that include warrants—simply because the more speculative, smaller-cap companies will have to offer more significant inducements to get investors to commit capital. I don’t think it is such a prohibitive environment—at least, not yet—that these companies can’t get funding at all, but they are going to come out of this with their cap structures more compromised than would have been the case if the environment had stayed the same as it was in 2013 and 2014. TLSR : You are very focused on milestones, which should be catalysts when they are successfully achieved. Your research notes detail these upcoming events. But I’ve noticed that investors are not as excited about milestones/catalysts these days. A press release announcing that the first patient has been dosed is a happy event for a biotech company, but it doesn’t seem to get any attention from investors. Are investors jaded now to these minimalist-style milestones? RS : Investors are much more sophisticated and demanding now. With very few exceptions, they are not interested in early-stage clinical milestones. They do want to see Phase 2 data. They do want to see Phase 3 data. They do want to see new drug application (NDA) submissions, and they want to see NDA acceptances. Of course, they want to see drug approvals and successful product launches as well. That’s paramount. But these days, we are even seeing exceptions to those rules. If investors think a company has a financing overhang, they’re not going to react even if a company files an NDA for its first product, which under normal circumstances is a big milestone. Synergy Pharmaceuticals Inc. (SGYP:NASDAQ) filed an NDA on Friday, Jan. 29, and the stock hardly moved in response. In this current environment, even late-stage milestones are not having as much of an impact as they ought to. TLSR : We recently saw a second, approved, inhaled insulin product rejected by a pharma partner. It happened back in fall 2007, and in early January 2016 we saw Sanofi SA (SNY:NYSE) return all rights to Afrezza back to MannKind Corp. (MNKD:NASDAQ) . Who would imagine that patients would rather stick themselves than inhale a powdered insulin? We are not only seeing development milestones ignored, but also approved products that fail in the marketplace. The question is, how can investors protect themselves from these kinds of disappointments? RS : Investors these days have to consider the possibility that even if a drug goes through the development and approval process successfully, it could still fail at the ultimate hurdle, which is commercial receptivity. If that happens, it doesn’t matter whether you managed to get through all the previous hoops. It may not have been an investible thesis to begin with, and there may be no pot of gold at the end of the rainbow. TLSR : Do you see this as a trend in the marketplace, where approved products fail? RS : I don’t know that I would call it a trend, but I could cite many, many examples of these kinds of failures: Fanapt (iloperidone) for management of schizophrenia; Zaltrap (ziv-aflibercept) for colorectal cancer; Qsymia (phentermine + topiramate) and Belviq (lorcaserin), both for weight loss; Stendra (avanafil) for erectile dysfunction. There are plenty of recent examples of drugs that were based on well-validated mechanisms and targeted big markets that failed utterly to make a commercial impact. TLSR : What’s the reasoning behind all of this? RS : Well, I think it’s clear that the failure of Afrezza is primarily due to safety concerns and issues associated with the labeling restrictions placed on the product by the FDA. I personally had always been negatively biased against Afrezza. My sense was that there is a fundamental opposition and resistance in the diabetes patient population to an inhaled insulin product, given the considerations of compromised lung function and long-term reduction in lung capacity. It’s not that patients would rather stick themselves. I think patients would rather have an oral insulin, which is why we cover Oramed Pharmaceuticals Inc. (ORMP:NASDAQ) . Oramed has Phase 2b data that will read out in April or May this year. It’s a 180-subject, double-blind, placebo-controlled trial with ORMD-0801 (oral insulin formulation) in type 2 diabetic patients who are not adequately controlled with metformin. We anticipate that if those data are positive, Oramed will likely get significant corporate attention from bigger players in the diabetes space because it’s widely understood that if you provide people with pill-based solutions in diabetes, such drugs are going to sell well. One of the fastest, best drug launches in history was that of Januvia (sitagliptin; Merck & Co. Inc. [MRK:NYSE] ), which isn’t even particularly effective relative to insulin, and you can’t treat diabetes patients only with Januvia. Oramed’s product gives effective nighttime glucose control, and in our view, that represents a meaningful advance in the therapy for diabetes. TLSR : Stendra ( Vivus Inc. [VVUS:NASDAQ] ) is supposed to rapidly bring on an erection. That sounds like an investible theory. What is the issue here? RS : Stendra has a faster onset for erectile dysfunction, but what Vivus failed to understand is that consumers don’t care as much about rapidity of onset as the duration of the effect—how long it lasts. Men want the ability to get an erection over a period of several hours. They don’t care whether the drug takes effect in 15 minutes versus 25 or 30 minutes, and exerts an effect for only half an hour. That’s not the ideal product profile. Understanding the market is vital. TLSR : What this discussion tells me is that investors should stay with oncology, no? RS : I think so. But I would also say developers in oncology must achieve a high hurdle of innovation. There’s going to be a high failure rate in oncology, not because the drugs don’t work, but because clinical efficacy is no longer impressive enough. If you don’t have a very high objective response rate; if you don’t have a lot of complete responses; if you don’t have a durable response, which is the case with ibrutinib (Imbruvica; AbbVie Inc. [ABBV:NYSE] ), a Bruton’s tyrosine kinase (BTK) inhibitor used in chronic lymphocytic leukemia that has successfully reduced cancer to a chronic condition for many patients, then you could suffer in the marketplace. If we think about complete responses being the gold standard investible thesis, you’re going to have a very hard time gaining investors’ attention these days, even with the autologous chimeric antigen receptor T-cell (CAR-T) therapies being developed by Kite Pharma (KITE:NASDAQ) and Juno Therapeutics (JUNO:NASDAQ) . A lot of drug development effort is being brought to bear within the domain of oncology, and clinical effectiveness has been evolving so fast in this area—in so many types of cancer—that it’s getting harder and harder to obtain and then retain investors’ attention. TLSR : Most CAR-T development will be going after lymphomas and leukemias because they seem to respond more quickly to therapeutic intervention, though perhaps not durably. What do you think about the concept of investing in solid tumor therapeutics versus lymphoma and leukemia? RS : In the solid tumor context, I think it is likely that targeted therapeutics will continue to be the mainstay of treatment for some time to come, and that includes monoclonal antibodies, armed antibodies, intracellularly active antibodies and, of course, the standard small molecule-based targeted therapeutics, such as kinase inhibitors. There is still a lot of opportunity within the solid tumor space, and I have a significant degree of confidence in the possibility of leveraging CAR-T approaches in the solid tumor setting, as well as in hematologic cancers, whether it’s autologous CAR-T, allogeneic CAR-T, or chimeric antigen receptor-tumor attacking natural killer cell-based (CAR-TNK, pronounced car-tank ) therapy. I believe there is the potential to demonstrate the same kind of efficacy in solid tumor settings as has historically been the case in hematological malignancies. TLSR : Ram, there’s one other important issue with regard to market uptake of new therapies. What about pricing newly approved products that address unmet needs? Isn’t that a concern for payers, and for patients? RS : Yes. There has been a rapidly accelerating trend over the past 10 years for cancer drugs to be priced very expensively straight out of the gate, even if the efficacy from a survival-prolonging standpoint is only marginal. A study done by researchers at Memorial Sloan Kettering Cancer Center showed that if the current trend in cancer drug pricing were to continue uninterrupted, by 2035 we would effectively be paying for novel anticancer drugs at, on average, $100,000 per month per patient. That’s unsustainable. When you have many patients who have a lifetime cap of just over $1M from their private insurance plans, then a single novel anticancer drug could, within a single year, eat up that entire lifetime cap. The patient is left with no coverage at all. We are getting closer to making cancer a chronic condition like HIV. The closer we get to rendering people cancer-free, the more people are going to say, “Well, if your drug doesn’t have a durable response and keep me alive for a normal lifetime, then it doesn’t deserve to reach the market.” If it does, by some miracle, get to the market, it shouldn’t be reimbursed and shouldn’t be given to patients. TLSR : Ram, shall we talk about some companies now? RS : Sure. We recently initiated coverage on a company called Cynata Therapeutics Ltd. (CYP:ASX), which is an Australian-listed firm. We have a price target of AU$1/share on the stock, which is currently trading at roughly AU$0.35–0.36/share. We believe this company is particularly interesting because, unlike other firms operating in the stem cell space, it is positioning itself as a manufacturing solution. It has developed a proprietary technology platform called Cymerus, which utilizes an inducible stem cell line. Because it’s a stem cell line, you can effectively produce and proliferate as many cells as you want, ad infinitum . You can then differentiate these cells into mesenchymal stem cells (MSCs). So far, MSCs represent the only stem-cell category that has gotten market approval. You have an MSC solution belonging to Melbourne, Australia-based Mesoblast Ltd. (MESO:NASDAQ; MSB:ASE; MBLTY:OTCPK) called TEMCELL (remestemcel-L), which is currently approved in Canada, New Zealand and Japan. It has been under consideration in the U.S. for quite some time. TLSR : MSCs are available for harvest from young, healthy individuals, and they can be propagated and expanded ex vivo for patients who need them. Why do you want to induce an allogeneic MSC? Is it to make them more embryonic-like, more immune-privileged? RS : The concept is that by having a cell line, you have a product entirely amenable to regulatory quality control standards. Yes, there are ways to generate MSCs allogeneically, but we have yet to come across a company that has a cell line-based way to propagate them. Having a cell line means that all the batches are identical. It’s a drug-like characteristic that is important in manufacturing and quality control. The MSC product is standard, and everything conforms to strict quality control standards. That makes the regulatory process much easier to navigate. We feel this is the principal advantage of using a stem cell line versus any of the existing methodologies. In addition, you can only go so far with the traditional allogeneic approaches to expanding MSCs. With Cymerus, you have a theoretically unlimited capability to expand and provide an “off-the-shelf” therapy on a commercial scale. Cynata has, in our view, the only truly sustainable production platform for MSCs. Thus, the company could conceivably be the manufacturing partner of choice for any company that wants to be in the MSC therapeutic space. Cynata is more risk-mitigated than the average stem cell company because it’s not focused on doing clinical development and product development entirely on its own. The company wants to validate its technology platform by generating additional clinical data, which it anticipates doing later this year. It also recently got authorization from the United Kingdom’s Medicines & Healthcare Products Regulatory Agency (MHRA) to begin a Phase 1b study of its proprietary cells in graft-versus-host disease. But the company feels its value-added proposition is within the context of being a manufacturer for other companies focusing on the development of MSC-based therapeutics. It’s the only company with a cell line capable of generating therapeutics at commercial scale. TLSR : That sounds like a commodity-class company. How do you create a value-added, brand-style model out of this platform? RS : I don’t think we would necessarily agree that this is a commoditized business model. But it’s a fair question. Usually, if you’re a service provider, you play in a commoditized market. But from what we have seen so far in terms of precedent partnership transactions in this space, potential partners and collaborators would regard this as a commodity, and we believe they would pay accordingly. These are not service agreements, where Cynata gets a modest mark-up on cost of goods and that’s it. We would be looking at Cynata to do licensing transactions that involve significant upfront payments, regulatory milestone payments, and decent royalties on net sales of future MSC-based products that utilize the Cymerus manufacturing technology platform. The company could potentially strike agreements such as the one Athersys Inc. (ATHX:NASDAQ) has with Tokyo-based big pharma Healios KK (4593:TYO), which will develop Athersys’ MultiStem (allogeneic multipotent adult progenitor cells) for ischemic stroke in Japan. The deal was announced in early January, and Athersys is getting a $15M upfront cash payment, with an option Healios can exercise for another cash payment of $10M. But there are also milestones that Athersys could garner during the development process, and they could add up to another $30M, as well as sales milestones of as much as $185M. Athersys will also get tiered royalties if the product is commercialized, including royalties for using the Athersys trademark. This is just one example. Celgene has an investment in Mesoblast; Novartis AG (NVS:NYSE) has an investment in Gamida Cell Ltd. For Cynata, we are looking at upfront cash payments and milestone payments prior to commercialization, and double-digit royalties ranging anywhere from 10–20% on net sales of its products, which could potentially generate hundreds of millions of revenue each year. TLSR : Cynata Therapeutics has an AU$30M market cap. Even if this technology is fabulous, which institutional investors can buy this stock to bid the shares up? RS : There are always investors looking for value in the micro-cap space. If you are an institutional investor—a healthcare-focused hedge fund—it behooves you to have some exposure to the micro-cap domain because of the sheer scale of the alpha that can be generated, even upon the achievement of relatively modest milestones. If you have a company trading at a $20–30M market cap, like Cynata, and it inks a deal where the upfront payment is $5M and the total value of the transaction is over $100M, with all of the potential milestones involved, then the aggregate net present value of that transaction constitutes a 2–3x return. That’s not the kind of magnitude of return you’re going to see with a company that trades at a $200-300M market cap. As I always say, it’s easier statistically to find companies out there that will go from $20M to $200M valuations within 12 months than it is to find companies that go from $200M to $2 billion ($2B), or $2B to $20B. The percentage return in your portfolio is exactly the same, but the likelihood of being able to identify companies that achieve that kind of percentage return increases as you go down the cap levels. TLSR : Can you go to the next name, please? RS : We are covering CorMedix Inc. (CRMD:NYSE.MKT), with a Buy rating and price target of $6.50/share. It is a particularly interesting name because it is developing a next-generation anti-infective solution called Neutrolin (taurolidine + citrate + heparin) to prevent catheter-related bloodstream infections (CRBSIs) in patients undergoing hemodialysis. The company has the FDA’s qualified infectious disease product (QIDP) designation, which was enabled by the Generating Antibiotic Incentives Now (GAIN) Act that was signed into law by President Obama in mid-2012. In our view, the CorMedix solution embodies a characteristic that is absolutely critical in the world of novel anti-infective development, and that is the ability to evade resistance by microorganisms and bacteria. Effectively, the company is using a non-antibiotic compound with the main active ingredient taurolidine, which has been widely assessed as active against various infectious organisms. Taurolidine is not like an antibiotic, against which resistance will always evolve. We think this platform positions CorMedix particularly well going forward. The company is developing taurolidine, in combination with citrate and heparin, to address the issue of catheter colonization by bacteria to form biofilms. You’re looking at CRBSIs in patients in the hospital with catheters threaded into their arms or threaded via a central line so they can be fed nutrients, be given a chemotherapy drug, or undergo hemodialysis. The catheter can, inevitably really, become colonized by all kinds of nasty bugs. Using the taurolidine catheter lock solution allows the company to effectively eliminate the bacterial colonization of these catheters. TLSR : Is the compound bacteriostatic, or is it specifically targeting the formation of biofilms? RS : Taurolidine has been documented to prevent biofilm formation, which sets it apart from typical antibiotics, which are not effective against biofilms. This puts CorMedix and Neutrolin in a privileged position among anti-infective agents, because Neutrolin can be used broadly without fear that resistance will occur and render it useless. In addition, because Neutrolin is focused specifically on the CRBSI domain, there is a clear hospital- and dialysis center-based setting for the product. We’re not talking about a mass-market product with hundreds of nationwide reps needed in a marketing effort. We should see interim data from the first of two Phase 3 trials with Neutrolin later this year. Obviously, if those data are positive, we believe CorMedix could obtain a very lucrative marketing partnership in the U.S., and would potentially be able to accelerate sales of Neutrolin in non-U.S. territories, particularly in Europe, where the compound is approved and marketed in certain countries. TLSR : Your implied market cap is only about $230M, and I’m assuming that’s a 12–18 month price target. As I look at Neutrolin, I’m thinking every intensive care unit (ICU) should be using it because nosocomial (hospital-acquired) infections are something institutions are focusing on. I’m also thinking that all the nephrology/dialysis centers should be using it. And there are other opportunities for taurolidine, such as prevention of urinary tract infections (UTIs) and associated catheter encrustation. Your implied market valuation seems very low considering the potential, and the fact that there is no other FDA-approved product like this on the market. Can you comment on that? RS : I don’t disagree with you. We have a relatively conservative viewpoint here, and the potential future upside may well be significantly greater than what we have projected. We are, first of all, assuming market penetration only in the domain of CRBSIs—not in UTIs or any medical device or suture-related use of taurolidine. We are also not giving the company significant credit for the commercialization of Neutrolin outside of the U.S. We are only modeling sales in the areas of hemodialysis, ICU patients, patients on oncology drugs administered via intravenous drip, and patients receiving total parenteral nutrition. In addition, we are assuming a relatively modest market cap compared to the current valuations of other single-product companies in the anti-infective domain—those developing antibiotics against which resistance will inevitably occur. TLSR : Do you have one more name? RS : We’re focusing on Sorrento Therapeutics Inc. (SRNE:NASDAQ) . This is not a one-product company: It has various presences in multiple therapeutic areas on multiple technology fronts. But it is an oncology-focused company first and foremost. We think there are multiple significant positive attributes to this company. The first is CEO and cofounder Henry Ji, someone we consider a visionary businessman with significant scientific acumen. Ji has built the company to focus on optimization of innovation. He has carefully established the company’s presence in multiple areas, including the domains of monoclonal antibodies, where Sorrento has technology platforms enabling it to produce high-affinity monoclonal antibodies as well as favorable linkers that would allow generation of armed antibody modalities, as well as multispecific, bispecific and trispecific antibodies. In addition, there are antibodies in the pipeline that can penetrate the cell and work on intracellular targets. Sorrento has an integrated antibody technology development platform that we think outstrips anything else currently present in the industry today. The company also has a pipeline of Phase 3 assets of “bio-better” antibodies. This is important because it’s not enough to have a biosimilar drug on the market. The European commercial experience with biosimilar drugs has been pretty negative, and has demonstrated that biosimilar agents usually get market share at the expense of very heavy price discounting, which effectively renders them almost prohibitive to produce. We think the only chance companies have in developing follow-on biologic products is to develop bio-betters—antibodies based on existing biologics that have some kind of advantage either on the safety front or the efficacy front. The pipeline at Sorrento contains four bio-better candidates: a bio-better of Xolair (omalizumab) for asthma; a bio-better of Simulect (basiliximab), a transplant antirejection agent; a bio-better of Remicade (infliximab), to treat rheumatoid arthritis; and a bio-better of Erbitux (cetuximab), to treat certain types of solid tumors, notably head-and-neck cancer and colorectal cancer. We believe this is a very diversified portfolio and includes bio-betters of several products that have not faced significant biosimilar competitor development. The aggregate annual sales of Sorrento’s branded biologic products are very significant; it is on the order of several billion dollars every year. By sitting on this pipeline of bio-better drugs, which have all generated Phase 3 data outside the U.S., Sorrento has already more than justified its current market cap of ~$170M. TLSR : Looking at Sorrento’s pipeline, there’s a group of cellular therapy assets as well, but they are earlier stage. Would you speak to that? RS : Cell-based immunotherapy is the most exciting part of Sorrento’s pipeline. The company is in a joint venture with NantKwest Inc. (NK:NASDAQ), which was originally known as Conkwest, and which is developing a natural killer (NK) cell line called NK-92 for use in cell-based immunotherapy. Natural killer cells are different from those used as the basis for CAR-T immunotherapy. They have certain advantages. In particular, they are a cell line, so they represent a product that can be readily scaled up and can go through the necessary regulatory quality controls. The product is standardized, batch to batch. Another advantage to NK cell scalability is that you can ensure supply for all patients who need it. With autologous CAR-T approaches, you don’t have any guarantee that you’ll be able to get enough cells out of the patient’s immune system at any given time to prepare the next cycle of therapy. One more advantage is that, with the furor over drug pricing and the significant spiraling of innovator cancer drug prices in particular, we anticipate a significant market need for a readily available, off-the-shelf, NK cell-based immunotherapy in the treatment of cancer. One very important advantage to using NK cells versus CAR-T is that, so far, we have seen that an NK cell-based approach does not cause cytokine release syndrome (CRS), which is a potentially fatal side effect of autologous CAR-T therapy. There is currently no way to effectively predict which patients given an autologous CAR-T therapeutic may manifest CRS. That’s a significant safety drawback to autologous CAR-T therapy. The NK cell-based therapy platform is called CAR-TNK, and Sorrento owns 50% rights to it. Sorrento also is supplying the antibodies necessary to arm the TNKs. Furthermore, we note that Sorrento, unlike other companies in the space, has invested in the development of diagnostic modalities that would allow the company to track in real time what’s called “antigenic drift” among tumor cells. Over time, cancer cells mutate to evade immune system attack, changing the antigens and proteins expressed on their cell surfaces to make them less easy to detect by immune cells. Sorrento has a diagnostic platform that tracks the ways cancer cell antigens evolve, and then designs antibodies against the new antigens as they appear. The CAR-Ts and CAR-TNKs recognize those new antigens and retain efficacy against the cancer cells even as they mutate. TLSR : Ram, your $45/share price target implies a $1.7B market cap. Is this a 12–18 month target price? RS : Yes. The company’s enterprise value looks to be under $100M today. We believe that just the CAR-TNK component of Sorrento’s valuation would more than justify a doubling, if not a tripling, of the current enterprise value. Then, if you add all of the other components, you could easily justify a target price in the $40–45/share range. Keep in mind that Sorrento owns 50% of the NantKwest CAR-TNK platform, and NantKwest currently trades at a market cap of roughly $800M. You can effectively argue that the 50% ownership of the CAR-TNK platform more than justifies Sorrento’s current market cap, let alone enterprise value. TLSR : It seems like a huge jump—$170M to $1.7B. If I’m an institutional investor, and I ask about that, what do you say? RS : If you’re thinking that this is an unprecedented or unrealistic valuation discrepancy, I would merely point out that companies like Kite and Juno, which are still relatively early stage, do not have any products on the market, and have real issues with regard to safety and scalability, trade at market caps of ~ $2B and $2.5B, respectively. From our perspective, these companies provide attractive valuation benchmarks for Sorrento. But we think Sorrento, of all the companies with a foothold in cell-based immunotherapy, is by far the most diversified, and arguably the most innovative. TLSR : You mentioned the possibility of a cytokine storm with the autologous CAR T-cell approaches. If I’m an oncologist and have my choice of an agent that could cause severe and potentially fatal CRS and one that is safer, I know which I’d choose. This has to ultimately be a growth driver for Sorrento, doesn’t it? RS : I don’t disagree with you there. I will stress that we don’t yet have clinical data with armed CAR-TNKs, and so, for the moment, the autologous CAR-T developers have the upper hand. But I believe if we see data from the armed CAR-TNKs that are similar, or equivalent, in efficacy, meaning complete responses and patients into remission, then we are going to see the market signal its preference for allogeneic CAR-TNK-based approaches versus autologous CAR-T. We have to remember, though, that there are ways to generate allogeneic CAR-T-based cells as well. I think what will wind up being the standard of care is an integration of all three—allogeneic CAR-T, allogeneic CAR-TNK and the ability to track antigenic drifts. For the moment, the only company we have seen that has a foothold in all three of those areas—and the ability to operate across all three modalities—is Sorrento Therapeutics. TLSR : Thank you, Ram. Raghuram “Ram” Selvaraju, Ph.D., is a managing director at Rodman & Renshaw, a unit of H.C. Wainwright, focused on healthcare research. He possesses over a decade’s worth of experience in healthcare equity research, and has been ranked by StarMine for earnings accuracy as well as The Wall Street Journal’s “Best On the Street” survey for his stock-picking performance. In addition, Selvaraju has appeared numerous times on Bloomberg, CNBC, Business News Network and BTV to comment on drug development trends, healthcare reform policy, and pharma and biotech M&A. Prior to joining Rodman & Renshaw, Selvaraju held senior research positions at MLV & Co., Aegis Capital, Hapoalim Securities USA and Rodman & Renshaw LLC. He earned a Ph.D. in molecular neuroscience and cellular immunology as well as a master’s degree in molecular biology from the University of Geneva in Switzerland, and a master’s degree in business administration from Cornell University.   Want to read more Life Sciences Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.   DISCLOSURE: 1) Dr. George S. Mack conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report and The Life Sciences Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None. 2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Cynata Therapeutics Ltd., Athersys Inc. and CorMedix Inc. Sorrento Therapeutics Inc. is a banner sponsor of Streetwise Reports. Mesoblast Ltd. is not associated with Streetwise Reports. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services. 3) Raghuram Selvaraju: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: H.C. Wainwright has received fees for investment banking services from Cynata Therapeutics Ltd. and Oramed Pharmaceuticals, and may seek to do business with companies mentioned in this report. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview. 4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent. 5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer . 6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.   Streetwise – The Life Sciences Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part..   Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.   Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.   Participating companies provide the logos used in The Life Sciences Report . These logos are trademarks and are the property of the individual companies.  
    TZOO Logo
    Travelzoo Seems To Be Picking Up On Market Cues And Progressing In The Right Direction
  • By , 2/10/16
  • tags: TZOO PCLN EXPE TRIP CTRP
  • Travelzoo (NASDAQ: TZOO), the global internet media company, is slated to release its Q4 2015 earnings on February 11th . In 2015, the company had been gradually recovering from its weak performance due to major changes in offerings. For the first nine months of 2015, its revenues declined by  about 8%  year-over-year to ~$110 million. Though the year-over-year performance of the company is still lagging behind, its recovery has been evident over successive months for the last twelve months (in constant currency terms).  Also, the company’s member base increased to 28 million (from ~27 million) after the acquisition of the Asia Pacific business  in August 2015. Some of the major events that impacted the company in 2015 included changing most of its offerings to a pull-based structure (instead of the earlier push-based services), gaining traction in its hotel booking platform which was launched in 2014, some key management changes, and reacquiring its Asia Pacific (APAC) business. Travelzoo is still on the path of transition and hence the decline in revenues is expected to continue in the fourth quarter as well. We will update our price estimate of $8.24 for Travelzoo  after its earnings release. See our full analysis of Travelzoo Focus On The Hotel Booking Platform Yielded Positive Results Travelzoo is currently trying to phase out the voucher format for local deals and is trying to promote more demand-based live deals. Also, after the launch of its hotel booking platform in Q1 2014, the company tried repositioning itself from a deal publishing platform to a hotel booking platform, reflecting some of the properties of a regular OTA. The platform offering more flexibility to both its users and hotel suppliers didn’t receive a warm welcome initially, however, it started gaining traction from the beginning of last year after its relaunch in February 2015. Taking cues from the pickup of demand, and a significant growth of hotel and deal searches on the platform, Travelzoo has currently planned on its global roll out.     Travelzoo Reacquired Its Asia Pacific Business To Focus On Global Expansion The main reason for Travelzoo reacquiring its APAC business in Q3 2015 was to get a slice of the fast growing Chinese outbound travel market. Chinese travelers are presently considered to be the top contributors to global tourism spending. According to a report by China Tourism Research Institute, in Q1 2015, travel agencies in China organized travel for around 9 million visitors to foreign countries, witnessing a 21.4% growth over the same period in 2014. According to a report by China Luxury Advisors, the overseas spending by Chinese outbound tourists is expected to have reached around $230 billion by the end of 2015, reflecting a 23% year-on-year growth. By 2020, the spending is expected to almost double to reach $422 billion. Other than China, which boasts of over 1.1 million members and over 2 million users, Travelzoo’s APAC subscribers are spread over  regions like Australia (~700,000 members), Hong Kong (~440,000 members), Japan (~1.1 million members), and Taiwan (~220,000 members). Management Changes The company announced a few crucial changes in its management in 2015. Travelzoo’s Chairman Holger Bartel assumed the position of its global CEO since January 1, 2016. Mike Stitt was announced to be the President of North America effective October 2015, and Vivian Hong assumed the role of the President of Travelzoo Asia Pacific, effective January 2016. Travelzoo’s Region-wise Performance Travelzoo is striving towards adapting itself to the changing market demands and that seems to be working well for the company. Hence, even after increasing expenses of product development or subscriber acquisition, the company witnessed improved performance. In Q3 2015, Asia, Europe, and Canada witnessed constant currency revenue growth. The driving forces were increased travel revenue driven by a growth in demand for airlines and vacation package revenue. However, the U.S. – Travelzoo’s biggest market – is yet to recover on account of certain product changes that are taking place in the region. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
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